Forex trading is the conversion of one currency into another. Commonly known as FX trading, it is one of the most busiest markets in the world, drawing more than $6 trillion. A network of buyers and sellers makes up this system. A trading platform that is open around the clock is the forex market. It is, however, classified into more categories. The primary categories consist of the
- North American sessions
In comparison to the European and North American sessions, the Asian Session is sluggish and tough to trade in. Because of the low volume and huge spreads, traders must know the best forex pairs to trade in.
It is significant to note that the Asian Session can also be referred to as the Tokyo session. The third most traded currency is the yen, and Japan is the third largest forex trading hub. 16% of all forex transactions are accounted for by it.
When does the Asian Session Take Place?
When the region is busiest, the Asian Session starts. The European and American sessions do not run concurrently. The Tokyo session is part of the Asian trading season. At 0000hrs GMT, this Session starts. This Session, however, overlaps with the Tokyo trading session, which begins two hours before the Sydney session. One hour before the Tokyo session ends, the London session starts.
In contrast to the other two sessions, the Tokyo session encounters significant volume at the finish. The Tokyo trading session has a fairly low volume, thus, traders focus more on the Tokyo – London crossover than the open trading session.
Why you should Trade the Asian Session
Understanding other trading sessions is crucial before deciding on the ideal forex pair to trade in. Forex trading is very liquid and ends on massive volume flows inside a decentralised market. While most companies in Europe and America are shut, the Asian Session experienced low trading volume.
The highest percentage of traders and money are generated during forex trade in these two areas. Low volume in the Asian Session provides more spreads with small moves, making it less predictable.
Choosing the Best Pairs during the Asian Session
Due to the high spreads, low volume, and high volatility, most traders, beginners, and professionals avoid the Asian Session. But, those who are skilled traders might benefit greatly from this Session. Consequently, knowing which forex pair is the best to trade is important.
Most American and European firms close at night. Due to a liquidity shortage, traders should avoid USD, EUR, and pair trades. There are fewer opportunities and high spreads, referred to as spread trading, as the volume of the currencies declines.
What are the Advantages of Asian Trading Session
- Non-Asian trade currencies like GBP, EUR, and USD cannot make significant trades outside of the trading region due to low trade liquidity levels.
- The liquidity coming into the market originates mostly from Asian movement. As a result, it could be less than what was experienced in the London and American sessions.
- Traders have more opportunities to enter and exit trades at the support and resistance levels. When combined with indicator signals, it improves the probability of joining a profitable trade.
- The Asian/Tokyo session’s slow and quiet nature makes it a perfect period for traders to manage their trades. By an analysis of risk and reward, traders may learn about the market. Spotting the support and resistance levels is easier since they are defined and coincide with the trading range.
- After the trading period, the Tokyo session overlaps with the London session. During this period, traders enjoy high trade liquidity levels, which lead to breakouts from already established trading ranges.
Top Forex Pair to Trade during the Asian Trading Session
While trading during the important Asian Session, it is important to consider the Japanese Yen pairs. The trading strategy may also influence the pair to chose. Nonetheless, traders who want to increase their profits should consider trading with other Asian currencies. During the Asian Session, the following are some of the best pairs to trade:
This pair involves the New Zealand Yen and the Japanese Yen. Forex traders choose the Japanese yen since it is the world’s third-largest trading currency. Most traders are unfamiliar with the NZD/JPY pair, which is relatively new. Nonetheless, it is quickly increasing as New Zealand becomes one of the most stable economies.
A straightforward trading opportunity exists on this pair. Liquidity is a significant concern during this period, so one must take advantage of the busy trading hours. As most traders speculate on the NZD price, it is highly volatile.
When trading the AUD/JPY, it is important to consider all of the market fundamentals to choose the best time. As it offers high liquidity, the Tokyo session offers the optimal time to trade. The price of the pair is highly volatile and prone to high fluctuations. Consequently, it is important to identify the periods when volatility is high.
One of the most popular trading pairs globally is the EUR/JPY. It is the most traded forex pair in the market, accounting for up to 3% of all daily transactions. Due to the high volatility levels, most traders like this pair. This trait gives it extra trading opportunities.
Two of the most widely used currencies in the world are represented by the JPY/USD pair. As the pair originates from two international economies, its price is influenced by several variables. To aid in making trading decisions, traders who favour this pair have access to various resources and information.
Its popularity also makes it the best trading strategy. Nonetheless, it is important to have a solid strategy because even a small change in the market can result in huge gains or losses.
Choosing the best currency pair to trade during the Tokyo session might be difficult. Each pair mentioned above has special qualities that cater to certain traders. Yet, the best pair is that most people prefer JPY / USD because to the high volumes, especially during the Asian trading session.
The best alternatives for people looking to diversify their trading portfolios are the NZD / JPY and the AUD / JPY. Before making any moves, traders must evaluate both markets. Yet for knowledgeable traders who comprehend the nature of liquidity and volatility, both pairs provide an opportunity.
During the Asian Session, there are several different trading pairs. The SGD/JPY, AUD/NZD, and GBP/JPY pairs are also options. It is best to avoid non-Asian currency pairs since high spreads are caused by low liquidity and a lack of opportunities.